Home Auctions Can Invite NailBiting Risk

Home Auctions Can Invite NailBiting Risk

Even though the
housing market continues to trace an upward path, foreclosures do
still occur—and home auctions are sometimes the result. It means
that there are still some good distress bargains to be had,
particularly if you are interested in buying a home at auction.
Television
shows like HGTV’s Flip or Flop portray the “nail-biting”
drama and money-making side of buying a home at auction—sometimes
inspiring home buyers to try their hand at the enterprise. But what
is sometimes underplayed in such TV presentations is a fact well
known to seasoned home auction veterans:
namely, that home auctions involve significant risk. If you have
never attended a home auction before, the process can be fairly
straightforward. Homes set for auction are listed publicly or made
attainable through a paid auction service. Once the auction starts,
you will have the opportunity to bid on the property, competing with
other buyers either online or in person. Auction properties are
usually offered on a cash-only basis, which eliminates would-be
bidders who would depend on a bank loan or mortgage; but where
auctions do allow financing, it’s a good idea for serious buyers to
get pre-qualified ahead of time.
For those who
do have the cash, it’s vital to understand that the property is
sold as-is—and yet it’s sometimes the case that buyers are not
allowed to do much more than drive past the home. In other words, any
problems with the condition of the property become the winning
bidder’s problems. Foundation issues, structural issues, mold
issues, poorly done handiwork—any major budget-busting flaws could
be present. And even if the house itself turns out to be in decent
shape, the successful bidder inherits everything that goes along with
the title—possible defects including outstanding mortgages, taxes,
liens (for instance, child support or U.S. Government Restitution
liens), or overdue HOA dues. That makes it a darned good idea to do
as thorough a preliminary title search as possible before bidding…but
since that will not generate a title insurance policy, at the end of
the day, that research creates no assurances or guarantees.
Participating
in a home auction can be a great way to get a new home without
spending as much as you would in a traditional purchase—but doing
as much preliminary investigation as possible is just common
sense…and if you can’t afford to buy a property in poor
condition, you should certainly restrict yourself to auctions that
allow inspections. While agents
cannot represent you at a home auction, if you are interested in
investigating further I hope you’ll feel free to contact me
anytime. I’m here to answer all your real estate questions—and to
help the buyers I do represent find the homes of their dreams!

Author:John BiermanPhone: 937-371-9139Dated: September 10th 2014Views: 867About John: I am entering my 9th year as a licensed real estate agent. For the last 9 years I have had the pleas...